I often get asked whether a condo or a townhome is better if the budget is the same. This question comes up particularly often in Chicago. When looking at the sale prices alone, the two types of properties may seem similar, but they can differ significantly in management fees.

The average monthly management fee for a Chicago condo is around $425 (according to condomanagement.com). Downtown high-rises typically range from $400 to $1,000, while mid-rise buildings in neighborhoods usually fall between $250 and $600. Luxury buildings can have fees exceeding $1,500, sometimes reaching up to $4,000. In contrast, townhomes, even with an association, generally have lower management fees because they manage less common area compared to condos that manage an entire building. When comparing these two similar property types side by side, even if the sale prices are similar, the difference in management fees can lead to a significant disparity in actual monthly expenses.

Where do these management fee differences come from? Condos have associations that manage all common facilities, such as the building's exterior, roof, elevators, and lobby, and they also carry master insurance for the entire building. This includes reserve funds, which naturally raises the management fees. Townhomes often have individual units managing parts of the roof or exterior, leading to relatively lower association fees. However, townhomes are not without reserve funds; if there are shared facilities like roads or landscaping, a reserve fund for those areas is still necessary.

The state of Illinois has attempted several times to enforce this aspect through legislation. Bills to mandate reserve studies for condo and townhome associations have been introduced in the state legislature in recent years, but they have yet to pass the committee stage as of the 2026 session (according to ilhoalaw.com). This means that Illinois has not yet established a legal requirement for reserve fund ratios like Hawaii has. Without such legal frameworks for either condos or townhomes, buyers must verify whether the association has conducted a reserve study. Chicago's diverse market, ranging from downtown high-rises to suburban low-rise buildings, makes this verification process even more critical.

When comparing condos and townhomes before making a purchase, here are the items to consider:

• Whether a reserve study has been conducted and the balance of the reserve fund
• Recent financial statements and the ratio of delinquent units
• Scope of common facilities (whether the roof, exterior, and elevators are included)
• Any ongoing litigation
• Rental restrictions and pet policies

These items are also linked to mortgage lending. Lenders assess the financial health of the association, and if the reserve fund is lacking or the delinquency rate is high, the property may be classified as a non-warrantable condo, making loan conditions more stringent (according to fanniemae.com condo project standards). If Korean families are looking at condos and townhomes near preferred school districts, it's advisable to compare these financial items alongside school ratings. Especially for families needing to move by a certain time due to their children's education, filtering out properties with potential delays in loan processing can be beneficial for managing timelines.

Ultimately, comparing condos and townhomes based solely on sale prices is only half the equation. To accurately gauge actual monthly expenses, management fees and the level of reserve funds must also be considered. Families relocating to Chicago from out of state should also factor in Illinois's unique property tax burdens. Given that the nature of condos in downtown and suburban school districts can differ significantly, the criteria for comparison should also vary depending on whether the focus is on actual residence or investment purposes.

Tax and management fee regulations can vary by county and association, so it's advisable to check the financial documents of the specific association before making a purchase. This article does not constitute investment or legal advice, and it is recommended to consult with a real estate professional before finalizing any contracts.